Yue Yuen Industrial (Holdings) Limited released its unaudited interim results for the six months ended 30 June 2026, highlighting a sharp profit contraction amid softer footwear orders, rising costs and uneven factory utilisation.
Financial Highlights • Revenue dipped 2.17% year on year to USD3.97 billion. • Gross profit fell 10.35% to USD823.57 million; Group gross margin narrowed 1.9 ppts to 20.7%. • Operating profit down 45.9% to USD112.00 million. • Profit attributable to owners declined 57.9% to USD72.00 million; basic EPS dropped to 4.49 US cents from 10.67 US cents. • Interim dividend maintained at HKD0.40 per share; payable on 9 October 2026 to shareholders on record 16 September 2026. • Net gearing edged up to 4.4% (31 Dec 2025: net cash), while the headline gearing ratio increased to 20.6%. • Free cash inflow reached USD40.23 million (1H 2025: outflow USD35.63 million).
Segment Performance Manufacturing – Revenue contracted 4.7% to USD2.67 billion amid a 6.4% drop in shipments to 118.6 million pairs. – Average selling price per pair rose 1.6% to USD20.95, partially offsetting volume weakness. – Segment gross profit slid 23.3% to USD380.3 million; margin compressed 3.4 ppts to 14.3% on higher labour and overhead costs and lower capacity utilisation. – Indonesia, Vietnam and mainland China accounted for 52%, 33% and 9% of total output respectively.
Retail (Pou Sheng) – Revenue rose 3.5% to USD1.31 billion; in RMB terms, sales slipped 2.1% to CNY8.96 billion. – Gross margin improved 0.4 ppts to 33.9% on tighter discounting and inventory optimisation. – Profit attributable to Yue Yuen from Pou Sheng increased 29.9% to CNY243.7 million. – Store network reduced by a net 200 outlets to 3,110 as Pou Sheng pursued a “retail refinement” strategy.
Cash Flow and Balance Sheet – Cash and cash equivalents stood at USD604.19 million; total cash including deposits over three months was USD815.91 million. – Total bank borrowings rose to USD1.04 billion; 67.2% are long-term. – Current ratio remained solid at 2.0 (31 Dec 2025: 2.1). – Capital expenditure reached USD129.34 million, focused on capacity optimisation, digital transformation and Pou Sheng store upgrades.
Operational Context Management cited persistent macro-economic uncertainty, inflationary pressures and geopolitical disruptions that weakened order visibility and tempered global footwear demand. Labour cost escalation, concentrated holiday schedules at key production hubs and rising overheads weighed on manufacturing efficiency and margins.
Pou Sheng mitigated softer mainland China consumer sentiment through stringent discount control, inventory ageing management and continued omni-channel integration.
Outlook Yue Yuen plans to advance its multi-location capacity strategy, with further expansion in Indonesia and India, and will pace new facility ramp-ups to match order flow. Priorities include tightening cost controls, enhancing digital manufacturing systems (SAP ERP, OCP, MES, DRS) and bolstering supply-chain resilience amid potential geopolitical risks. The Group targets balanced value and volume growth, leveraging “athleisure” demand and its end-to-end development capabilities.
No significant acquisitions or disposals were recorded in the period. The company confirms compliance with Listing Rules on connected and related-party transactions.
Board Changes and Governance Yue Yuen maintains full compliance with the Hong Kong Stock Exchange Corporate Governance Code. All directors observed the Model Code for securities transactions during the period.
The board has declared that no material events have occurred post-30 June 2026 up to the reporting date that would affect the Group’s operations or financial position.
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